Sir Philip Watts, Chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group of Companies, signed the agreement on behalf of Shell. His Excellency Ali Al-Naimi, Minister of Petroleum and Mineral Resources, signed on behalf of the Saudi Arabian government.
Shell holds 40 percent of the consortium, and is partnered by Saudi Arabian Oil Company and Total Ventures Saudi Arabia which each hold 30 percent. The consortium's exploration activities will be the first upstream operations in which international energy companies participate in Saudi Arabia since the nationalization of the oil and gas exploration and production industry in the 1970s.
The Royal Dutch/Shell Group of Companies already has five joint ventures in Saudi Arabia in the downstream areas of refining, petrochemicals and marketing oil products, and with its partners has some $7.8 billion invested in the Kingdom.
The signing ceremony follows the approval of the agreement by Saudi Arabia's Supreme Petroleum Council, the council of Ministers and the Shoura council. The incorporation of the consortium as a joint venture company is now expected to be completed by the end of 2003.
Exploration is expected to commence in the first quarter of 2004. The consortium's gas acreage covers over 200,000 square kilometers of the South Rub Al Khali (Empty Quarter), an area five times the size of the Netherlands and almost as large as Great Britain.
Commercial discoveries of gas will be developed by the consortium for domestic use in power generation, water desalination and petrochemicals production.
Sir Philip said today: "Gas is playing an increasingly important role in meeting the world's growing demand for energy and is likely to overtake oil as the preferred fuel sometime after 2020. The Royal Dutch/Shell Group of Companies is the world's largest private producer of natural gas, and I am delighted that we will now be able to apply our expertise and experience to help Saudi Arabia build a long-term gas business. The agreement we have formally signed will see us begin exploration and production operations in the country with the world's largest reserves of hydrocarbons. It is of historic importance for the Royal Dutch/Shell Group of Companies."
Walter van de Vijver, a Group Managing Director of the Royal Dutch/Shell Group of Companies and Chief Executive Officer of Shell Exploration and Production, said: "The development of its gas reserves is an enormous undertaking for Saudi Arabia. I am glad that the Royal Dutch/Shell Group of Companies has been invited to play an important part in this work. I am also particularly pleased that we are expanding our partnership with Saudi Aramco, the world's largest producer of hydrocarbons, into the upstream."
Brian Wilson, the UK Prime Minister's Special Representative on Trade Opportunities for British Business, attended the signing ceremony. He said: "I am extremely pleased to witness this historic agreement between Shell and Saudi Arabia. The Royal Dutch/Shell Group of Companies has done a remarkable job assisting with the development of the UK gas sector, and I am certain it will do the same in Saudi Arabia."
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